European exporters and importers face foreign exchange related challenges in doing business internationally, because
European banks often apply poor FX rates to their corporate customers. This results in significant hidden FX costs for
exporters and importers. Fortunately, European companies now have a cost-effective alternative to banks, which
enables cutting hidden FX costs by even hundreds of thousands of euros annually.
The reasons for the use of poor FX rates by European banks are related to for example banks operating inefficiently as
well as lack of transparency and competition in the European FX services market. First, banks tend to have high costs
due to several reasons. These costs are passed on to their customers for example in the form of poor FX rates. Second,
banks do not send invoices to their customers for providing FX services, but rather they often simply apply poor FX
rates, which results in significant hidden FX costs for their customers. Therefore, companies are often not aware of the
magnitude or even the existence of these hidden FX costs. Third, so far fintech companies that challenge banks with
low-cost FX services have had limited presence in the European FX services market, but that is finally changing. As a
result, now European exporters and importers have access to foreign currency payments and hedging services at
significantly lower cost compared to banks.
Several agile fintech companies focus on providing better FX rates than banks. One such fintech company is NEOFX that
helps European companies cut FX costs by providing better FX rates than banks. “In fact, our customers cut hidden FX
costs typically by tens or hundreds of thousands of euros annually, because banks’ FX rates are often poor compared to
ours.”, says Ville Lipponen, Co-Founder of NEOFX. They launched their services initially in the Nordics and now they are
expanding also to other European countries. “We are unique in the fintech space, because our customers have a highly
credible legal counterparty and our customers may continue to use the automated payments services provided by their
banks.”, adds Thomas Jensen, Co-Founder of NEOFX.
Security is of critical importance, when dealing with financial services. To ensure first-class security one potential
business model for fintech companies is to partner up with credible established financial institutions. For example,
NEOFX has adopted a business model, where Currencycloud that was acquired by Visa provides their services. As a
result, NEOFX’s customers have a highly credible legal counterparty. Another benefit of this business model is utmost
efficiency. Unlike in case of for example most banks, in this business model services are developed in a centralised
manner for global use and local fintech companies such as NEOFX manage customer interaction in specific geographical
regions. Consequently, NEOFX’s customers can take advantage of competitive FX rates and they can do so securely. The
final beneficiaries are European exporters and importers.
NEOFX helps European companies cut foreign exchange costs by providing better FX rates than banks. Our customers
cut hidden FX costs typically by tens or hundreds of thousands of euros annually. Our proven services are widely used by
exporters and importers across Europe. Our customers’ legal counterparty for our EU regulated secure services is
Currencycloud that was acquired by Visa. To become our customer, partner or employee visit www.neofx.eu and get in touch!